For the second time since the start of Commissioner Monti’s term of office in the Competition DG, the Commission has blocked a merger deal. The decision concerned Volvo’s bid to take over its main rival Scania. It follows an in-depth investigation of the relevant market for heavy trucks, city buses, inter-city buses and touring coaches.
The parties are Swedish companies, active across Europe and beyond, primarily in the manufacture and sale of trucks, buses and engines. The combined market share of Volvo and Scania in each of the relevant markets would have ranged from around 90% (for the Swedish heavy truck market and the Finnish and Irish city bus markets) to around 50% (in the UK coach market and the Irish heavy trucks market). The two companies have been each other’s closest competitors. They have pursued similar strategies and have a similar brand image, based on excellent quality and reliable service. The investigation also showed that the barriers to entry or expansion in this market are high and that any competitor who wanted to challenge the merged entity would have to make large investments over a significant period of time to build up the necessary critical mass of installed vehicles in the relevant market. By removing the largest and closest competitor, the merger would therefore have significantly changed the market structure to the detriment of the customers.
In February, Volvo proposed a number of undertakings intended to address these competition concerns. The Commission concluded that the proposed undertakings were insufficient to resolve the problems arising from the operation. In March, Volvo submitted a new package of proposed undertakings, but the Commission did not consider there were any exceptional circumstances justifying acceptance of the undertakings after the deadline for them, which was 21 February. Moreover, there was not enough time left for the Commission to evaluate and consult on the new proposal before the legal deadline for a final decision, which cannot be extended. Also, the new undertakings would not have clearly removed all the identified competition concerns. (IP/00/257, European Report n° 2483, 15/03/00)
